Status Report on Distributed Energy Resources and Evaluating Proposals and Practices

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1 Status Report on Distributed Energy Resources and Evaluating Proposals and Practices Tom Stanton Principal Researcher Energy and Environment National Regulatory Research Institute

2 Presentation Outline Review Upcoming NRRI Research Report: Listing the major reasons for the heightened interest in rate designs for DG, especially solar PV Summary status report on DER legislative and regulatory policies, based on a review of over 100 proposed or recently enacted changes in 43 states plus DC. Ideas for how best to evaluate proposals September 2015 T. Stanton, NRRI 2

3 Recent Status U.S. distributed PV cumulative capacity has roughly doubled every two years from 2003 to the present, with the rate growing even faster nearing full launch velocity. Lower cost PV and other pressing utility industry factors have ignited, in the last two years, an explosion of proposed legislative and regulatory actions, already touching 43 states plus DC. Many utilities are proposing higher fixed charges and net metering freezes or rollbacks, but some state legislatures and commissions and utility companies, and many DER advocates, are proposing policy changes to help DER grow even faster. September 2015 T. Stanton, NRRI 3

4 Pressing Utility Industry Factors (1) aging utility infrastructure in need of replacement (2) new requirements for grid modernization (3) further tightening of federal environmental protections and the likelihood of greenhouse gas regulations (4) flat or declining loads and load factors, resulting from greater energy efficiency and the widespread slow-growing economy (5) declining costs and rapidly growing markets for distributed energy resources, particularly solar PV and battery storage (6) state and utility net metering programs nearing or exceeding existing caps, thus triggering policy reviews (7) strong interest on the part of growing numbers of large corporate and institutional buyers and municipalities, in getting more or all of their electricity from renewable and low- or zeroemissions energy resources September 2015 T. Stanton, NRRI 4

5 Legislative & Regulatory Activity (1) Community Solar 7 state decisions and 9 states plus DC with open dockets 8 states where legislatures enacted laws directing state commissions to set up the programs: California, Connecticut, District of Columbia, Hawaii, Illinois, Maryland, New Hampshire, Oregon. Fixed charge increases 2 new laws enacted (KS, OK), authorizing rate changes 45 proposals, some for all customers, others only for net metering customers, only for solar, or only for DG 23 dockets are still open in 17 states 22 dockets are closed in 13 states, with three of the final orders appealed to state or federal courts September 2015 T. Stanton, NRRI 5

6 Legislative & Regulatory Activity (2) Legalizing 3 rd Party Ownership approved by legislation in CT, DC, GA, HI, and VA Approved by state court decision in IA under commission review in North Carolina Generic NEM reviews Open regulatory proceedings in 19 states Proceedings initiated by the state regulatory agencies in 17 states, plus 9 cases in 5 states initiated by utilities Only 4 states now do not have net energy metering programs Generic DER reviews Open dockets in 8 states Decisions reached in 3 states September 2015 T. Stanton, NRRI 6

7 Legislative & Regulatory Activity (3) Broad REV-like reviews California, District of Columbia, Hawaii, Massachusetts, Minnesota, New York Utility ownership Approved in Arizona, affiliate ownership is proceeding in Georgia, Kansas has one open docket, and utility ownership has been greatly restricted in New York September 2015 T. Stanton, NRRI 7

8 How can proposals be evaluated? Model effects on utilities Pro-forma financial modeling Avoided costs for G, T, and D With and without possible mitigating measures and rate design changes Model effects on different groups of customers: Low, medium, and high energy users Smallest, medium, large, and extra large PV systems Low income customers Voluntary green power purchasers Model effects on DER business value chain Study feedback loops between policies and consumer adoption rates T. Stanton, NRRI 8

9 Future research needs How best to achieve fully integrated, localized, distribution system resource planning? How can IRP models be expanded to accommodate non-transmission and non-distribution alternatives? How to model the economic inputs and outputs for each utility service territory? What will be the direct and spin-off effects of changes in DER markets? Is a utility be better off with lower sales per customer but a growing customer base? T. Stanton, NRRI 9